Q&A with ALLan Meltzer: This Internationally Recognized Expert on the Fed Says Now Is the Time for the Federal Reserve to Start Seriously Fighting Inflation. Allan Meltzer Says the Consumer Price Index Is Masking Rising Inflation Because of the Hefty Component That Reflects Current Falling Housing Prices

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Allan H. Meltzer is the nation's leading historian of the Federal Reserve System. He is professor of political economy and public, As. yr policy at the Carnegie Mellon University, Pittsburgh, and one of the nation's most prominent economists. At a time when all eyes are on the Fed, his view on what the central bank is up to is arguably one of the most valued and trusted. * Meltzer's most recent magnum opus was a two-volume set published in February 2010, continuing his history of the Federal Reserve System. There was the 696-page A History of the Federal Reserve, Volume 2, Book 1951-1969 and the 616-page A History of the Federal Reserve, Volume 2, Book 2, 1970-1986. Both were met with critical acclaim. These latest books received an Outstanding Academic Titles award last year from Choice magazine, a publication of the Association of College and Research Libraries (ACRL), Chicago. * Richard Sylla, professor of the history of financial institutions and markets at the Stern School of Business at New York University, has described Meltzer's most recent work as a "magisterial history" from a "first-rate scholar." * In addition to his most recent work, Meltzer has also written A History of the Federal Reserve, Volume 1, 1913-1951 (2002).

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Since 1989, Meltzer has been a visiting scholar at the American Enterprise Institute (AEI), Washington, D.C. He has also been a visiting professor at Harvard University, Cambridge, Massachusetts; the University of Chicago; University of Rochester, Rochester, New York; the Yugoslav Institute for Economic Research; the Getulio Vargas Foundation, Rio de Janeiro; and City University London.

Meltzer served as a member of the Council of Economic Advisers under President Ronald Reagan, from 1988 to 1989. He served as chairman of the International Financial Institutions Advisory Commission of the U.S. Congress for 1999 and 2000. He served as consultant to the Treasury Department, the Federal Reserve Board, The World Bank, foreign governments and central banks.

Meltzer, along with Professor Karl Brunner of the University of Rochester, founded the Shadow Open Market Committee (SOMC) in 1973, of which Meltzer served as chairman until 1999.

The original objective of the committee was to evaluate the policy choices and actions of the Federal Reserve's Open Market Committee and its discussions and recommendations focused on concerns about inflation. Over the years, the committee has broadened its scope to cover a wide range of macroeconomic policy issues, from monetary and fiscal policy to international trade and tax policy.

In 2003, Meltzer received the Irving Kristol Award from the American Enterprise Institute and the Adam Smith Award from the National Association for Business Economics (NABE), Washington, D.C. He is a distinguished fellow of the American Economic Association, Nashville, Tennessee.

Meltzer received his bachelor's degree in economics from Duke University, Durham, North Carolina; and a master's and doctorate in economics from the University of California at Los Angeles (UCLA).

Mortgage Banking caught up with Professor Meltzer recently--after he wrote an op-ed piece for The Wall Street Journal on April 7 titled "The Fed Should Consider a 'Bad Bank'"--to ask him about his proposal that the Fed spin off $1,069 trillion in mortgages ($937 billion) and agency debt securities ($132 billion in Fannie Mae, Freddie Mac and Ginnie Mae securities) in longer-term assets into a lockbox.

Q: You are in basic disagreement with Federal Reserve Chairman Ben Bernanke on the outlook for inflation. He thinks inflation is a temporary phenomenon that will go away, and you think otherwise.

A: I have never known a country--and I've studied the history for many years--that had high money growth, large budget deficits and a declining exchange rate that ever didn't have inflation. So, it doesn't surprise me that 1 disagree with Mr. …

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